Question

Canadian Tire Corporation is a general retailer with nearly 1,700 retail and gasoline outlets across Canada. Canadian Tire’s customers can pay for purchases using a Canadian Tire credit card. The company occasionally offers special promotions that allow customers to purchase merchandise on credit and pay after six months or one year without paying interest on the amount due. Canadian Tire refers to credit card receivables as loans receivable. Its annual report for 2012 included the following disclosures related to its loans receivables and the related allowance for credit losses:

Required:

1. What amounts did Canadian Tire report as loans receivables on its statement of financial position at the end of 2012?
2. Prepare summary journal entries to record the transactions related to loans receivable in 2012. These include the write- off of receivables, recovery of receivables written off, and bad debt expense.